1. Field of the Invention
The present invention generally relates to approval and allocation of costs associated with purchases against a procurement contract, and more particularly to receiving an electronic invoice, and validating the invoice including validation of rate information contained in the invoice with information from the procurement contract, and allocating costs.
2. Related Art
Electronic procurement, or e-procurement, provides a mechanism to purchase goods and services electronically. Using a network of computers, such as the Internet, a buyer can place an order for a good and/or service, typically by accessing a supplier's web. Thus, purchasing within an organization can be made easier at least on the front end. However, of course, a purchase has an associated request for payment, which is typically in the form of an invoice received from the supplier. Before a supplier's invoice is paid, the organization for which the buyer made the purchase must validate the information contained in the invoice.
In a case that the invoice can be matched to a purchase order, the process of validating the invoice is made easier, since the purchase order, and the purchase itself, typically went through an approval process before it was sent to the supplier. Before a purchase order is submitted by the buyer for approval, the buyer completes the purchase order, which typically includes such information as the supplier's name and address, a description of the item to be purchased, together with price and quantity. The purchase order also typically includes the buyer's name and department within the organization. This latter information is used to allocate the costs associated with the purchase. The completed purchase order is reviewed, and if approved is submitted to the supplier to make the purchase. Upon receipt of the purchase order, the supplier fills the order and submits a request for payment. The request for payment is typically in the form of an invoice, and usually includes the purchase order, or some reference, e.g., a purchase order number, to the purchase order.
The purchase order is used by the organization to verify the contents of a received order. In addition, when the supplier submits the invoice, the invoice is compared to the purchase order to verify the information contained in the supplier's invoice.
However, in a decentralized procurement environment, buyers in departments within an organization may be permitted to make a purchase by directly contacting the supplier without first completing a purchase order and obtaining pre-purchase approval. In such a case, a supplier's invoice is typically the organization's notification of the procurement. In addition, the invoice is usually received by a department, other than the buyer's department, which has the centralized task of reviewing and approving the supplier's invoice for payment. While a type of procurement of a good or service which involves a decentralized purchase without a purchase order against a contract facilitates the procurement, this type of procurement makes it difficult to validate an invoice for approval and payment, typically a centralized task.
To illustrate, using the following example, an organization has an existing procurement contract with a credit bureau to provide demographic data, such as with a market list service, to be used within the organization. A buyer in a department associated with a specific cost center within the organization contacts the credit bureau to request the market list service. Other buyers associated with other cost centers may also use the market list service, or another service provided by the credit bureau. In addition, in making the purchase, the buyer may represent more than one cost center. The credit bureau submits an invoice using a centralized destination within the organization to request payment for each of the services that it performed over a period of time. At that time, the information contained in the invoice must be validated, and the appropriate cost center(s) charged for the costs associated with the procurement.
Since the request for the market list service need not be submitted to the supplier with a purchase order, the supplier's invoice may not include typical information (e.g., a purchase order number, pricing, buyer's department, etc.) used to validate and allocate the costs identified by the invoice. In addition, the invoice received from the supplier is typically in a non-standard form.
In order to approve the invoice for payment, the items contained in the invoice must be identified and matched to a contract rate to ensure that the invoice rate charged by the supplier matches the contract rate. In addition, the costs associated with the services identified in the invoice must be allocated to the appropriate cost center, or cost centers.
To facilitate the procurement process, the organization may use an online procurement tool for goods and services. One example of such a tool is called Ariba Buyer, which is provided by Ariba, Inc. In addition, Ariba Inc. offers software, Ariba Contract, which provides an online repository of contracts and rate cards, and Ariba Invoice, used for processing invoices. However, existing electronic procurement tools do not have an efficient mechanism for receiving and processing an electronic procurement invoice, which is not backed by a purchase order. In addition, these electronic procurement tools do not provide backend processing for allocating costs to the appropriate cost center(s).
Given the foregoing, what is needed is a system, method and computer program product for approval and allocation of costs in electronic procurement.